New construction ( Duplex & ADU )

[Brandon Clark]

I’m working on a small multifamily new-construction deal in New Orleans and wanted to get feedback from investors who’ve done similar projects. The plan is intentionally conservative, but I want to pressure-test the financing and execution before locking anything in.

It’s a 31×110 lot (3,410 sq ft)

The current concept is a two-story front duplex (two 2bd/2ba units ~1,150 sq ft each) with a rear 1bd/1ba ADU (~600 sq ft). Target rents are ~$2,100 per duplex unit and ~$1,600 for the ADU. The project is designed to support multiple exits: hold long-term with a DSCR refinance, or sell as a turnkey small multifamily if market conditions warrant.

The land is structured creatively: the owner is deferring payment and will receive $50K on the back end, with no required monthly payments. Estimated hard + soft construction costs are ~$580K–$600K, plus ~$20–25K in closing costs and ~$65–70K in holding costs, putting total exposure around $680K, excluding the deferred land payoff. Based on projected NOI, the stabilized value pencils in the low-$700Ks, supporting a 75% DSCR refinance that should retire construction debt and cover the $50K payout.

I’m specifically looking for feedback on financing structure (local bank construction-to-perm vs. private construction → DSCR refi), risk points with historic districts, and any lessons learned from duplex + ADU or urban infill builds. I’d appreciate any perspective from those who’ve executed similar deals.

Scenario

· Market 2bd: $2,100

· Section 8 2bd: $1,650

· ADU market: $1,600

· Monthly rent: $5,350

· Annual rent: $64,200

· Expenses (35%): −$22,470

· NOI: $41,730

$41,730 ÷ $680,000 = 6.14% cap

Brandon